Serendipper wrote:But if not for other alternatives (ie welfare or rich parents), then automation and general population expansion creates a glut of workers competing for the cheapest wage. So in this case, a free market in workers works to the detriment of society by keeping wages cheap and restraining incentive to increase efficiency.

I basically agree with this. The market price of human labor will go to zero over time. It's already happening in low-skill industries, and it's going to happen everywhere this century. It's a problem that needs to be addressed (my preferred solution is a Basic Income pegged to revenue from Value Added and Land Value taxes).

Yes UBI is the most sensible solution since then no one is forced to work for the profit of another in order to survive and we could then assume that all work is voluntary. Wages could be regulated by the amount of UBI, antiquating min wage laws. UBI should be the amount of money required to at least live a meager existence or else it wouldn't fulfill its purpose of making all work voluntary.

Serendipper wrote:it's addressing the "taxation is theft" argument

OK. I'm not making this argument, and it's not inherent in capitalism.

Only the capitalists make that argument. I don't see many socialists hollering taxation is theft lol. It's only the pirates proclaiming pirated loot is proprietary.

Serendipper wrote:Now if the person were made aware of the productivity split and agreed to the division...

So maybe the appropriate alternative question is for the employer to ask the employee to provide an accounting of her expenses: if it only costs you $300 per week to survive, and your work is worth $400 a week to me, let's split the difference at $350.

But that's still leveraging someone's dire predicament against them which is exploitation.

I mean, companies have recent begun hiring felons and druggies in order to escape raising the wage to attract quality employees. They are using someone's situation as leverage to minimize wages.

A guy I know working for a Berkshire company said there are 30 jobs open perpetually that pay almost twice the minimum wage. I say raise the wage and people will stick. Instead of doing that, he'd rather characterize the people as lazy bums who won't knuckle-down and work for the peanuts he's offering. And that same company has stopped drug testing in order to hold wages down.

"What??? No one will hire you because you're a crackhead??? What fortuitous circumstance be this; no one will work for me because I'm a greedy prick! Welcome aboard!"

I agree that seems absurd. Similarly, it seems absurd for an employee to expect that they can get an accounting of what will be done with the value of their labor as part of negotiating their pay, or to hold that the only way to reach a fair, non-theft, non-exploitation agreement is for both parties to provide this information.

Yes it's unrealistic, but my point isn't to fix the system, but illustrate what's going on and how the rich are getting that way.

Serendipper wrote:But the exploited work says, "That SOB took advantage of the fact that I have no other options and he exploited me!" The fraud victim says "That SOB took advantage of the fact that I'm ignorant and he capitalized on that." The rape victim says "That SOB took advantage of the fact that I'm defenseless and he capitalized on that." There isn't much difference.

One pretty significant difference is that the employer made her 'victim' better off. They may have accepted out of desperation, but they would have been worse off if they hadn't accepted (indeed, that's the premise of accepting our of desperation). The same isn't true of being defrauded or raped.

I suppose that's true. I paid a fair wage and workers were better off working for me than not, but it still wasn't right, evidenced by the fact that I had to hide what I made and pretend I was just as poor as they were.

Serendipper wrote:If an employee really had a share of the profit, they'd be motivated to find ways to increase it instead of acting like lazy bums riding the clock.

That's why employers offer it, particularly to people whose labor has a significant effect on total output (e.g. management and executives).

Management and executives are the ones overpaid to start with. They don't do anything commensurate with their pay which is a disservice to shareholders and society.

For low-skilled labor, there are game theoretic limitations on how much it can motivate. One of ten thousand people on an assembly line can't meaningfully move the needle, so the pay-off to free-riding is likely to outweigh the pay-off to working harder that equity could provide. So you don't see a lot of equity for low-level jobs, other than in start-ups, which are borrowing against their future by paying in equity.

For whatever reason, american workmanship used to be the standard of quality, but now it's a mark of shame that I seek to avoid when making a purchase because I know, for whatever reason, the american worker doesn't care about quality. Obviously there is no incentive for him to care, and that's especially true in unions where employees can't be fired.

promethean75 wrote:running a business is uncommon because business owners are a minority... not because running a business is an 'uncommon skill'. you can make just about anyone a business owner if you gave them a calculator and a note pad. nothing to it. and 'difficult to do well' is like a hasty generalization. what if bob can do easily what john struggles to do? how do we quantify 'difficult'?

It might be a better technique of persuasion if we concede a few points in favor of the capitalists. Running a business is a gigantic pain in the ass! Although, admittedly, most of it is self-imposed. I had to be a jack of all trades just to do one trade. I had to juggle employees who may or may not show up on time, or at all. I had to predict the weather, repair tools, repair damaged property, console customers, learn accounting, insurance, legalities,,, I was human resources, sales, mechanic, accountant, etc all rolled into one, plus being a worker and it drove me crazy! I just wanted to be left alone and work without dealing with a bazillion variables zooming in random directions, but if I wanted the money, then I had to do it. Not everyone can do that kinda thing. It requires a drive and motivation to get ahead.

My complaint isn't against the small business owner, but the ceos, managers and executives who don't do anything, except play golf and fly around in private jets, while exploiting those who do all the work to support their opulence.

He is saying that the capitalists are providing jobs that wouldn't otherwise exist if not for the idea that one could get rich by providing those jobs.

yeah there's a grey area here that's difficult to navigate. there are things that are necessary commodities, and then there are luxuries that aren't necessary... like the wacky wall walker. remember those? some dude got rich off that idea. however, why couldn't the state take the same risk and come up with some novel product like this for the same reason?

I don't know. Who is the state? On what merit did they come to power? And does that merit convey creative genius?

Doritos used to have more sprinkles. I emailed FritoLay and told them they're not putting enough flavoring on their chips, so they sent me coupons for free bags of bland chips. To date they still haven't fixed the problem and I hate the totalitarian control they have over a staple of Americana. But if the gov seized the company, would I have anymore influence than I do now?

who knows... maybe the people would like to have a spatula that talks to you... let's try the idea and start making them. if we fail, we've lost nothing; we simply re-allocate the resources we use to produce the talking spatula to some other use. but what happens when a capitalist fails at such a venture? a small disaster for hundreds if not thousands of workers.

That's a good point.

anyway, don't think that people need to have the motivation of 'getting rich' to come up with marketable ideas.

It's not to come up with the ideas, but to go to the effort of the pain in the ass of running the business.

how many people with degrees end up working at mcdonalds because they can't find a job?

The capitalist would say that no one forced anyone to get a degree, especially in something silly like philosophy. They would say it's a gamble that didn't pan out.

in a socialist society, very special attention is paid to your skill set, and you WILL be put where you are most able to perform according to your skills. if you don't want to do this... then go get a job at mcdonalds. but at least you are given the option to decide, rather than having to take the job because you are not given the opportunity to do what you do best. an astrophysicist working at harris teeter is some bullshit that would only happen in capitalism.

So Stacey Lou (you invention) isn't bearing any risk, she's being paid a salary rather than whatever surplus the business earns, she isn't the driving factor for the business, she gets her direction from some other person. She isn't doing what the owner does.

consumers who buy things value the things they buy, and couldn't care less what 'risk' is taken by a company or what the 'driving factor' is, or who gets what 'direction' from who. a consumer is not going to value the broom they just bought more because the owner of the company that made it stayed in the office and extra thirty hours and experienced five headaches.

the capitalist across the street makes brooms too... and he stayed an extra forty hours and experience seven headaches. should the consumers who bought his broom value him more than the other capitalist across the street? no. they don't care anything about that shit. they care about brooms.

we are talking about the TANGIBLE value prescribed to the market by those who participate in it by buying. what i'm saying is that the REAL value of any given form of labor is worth what it is, based on to what extent it is part of the production of things consumers buy. this means that when capitalist does x, it is no more 'valuable' than when stacey lou does it, because x has no tangible value other than what it contributes to production.

what all this means (and this will address your comments too, dipper) is that we are either just talking about capitalism, or creating arguments that are being made to defend and justify it. and the above argument does no such thing. rather it's just something the capitalist tells himself after a careless and uncritical examination of what 'value' means. no special feature is given to the capitalist for all the headaches and struggles and risks and whatever else he has/takes when we are asking about the value of his actual labor... what he actually, physically does in the chain of production. and if any of those things can also be done by a worker, then those things are not special forms of labor that require a capitalist to be 'done'.

so to say 'capitalism is necessary because there is a special kind of work that only an owner can do' is nonsense. and to further say that capitalism is good because it creates a context in which a class of people will exist to be able to do that special work, and be needed to do that special work, is an extension of the same nonsense.

if we are merely describing capitalism, then yeah, these points being made in this thread are fine. but if these points are being raised as some kind of defense for capitalism, it ain't workin'.

Every time anyone voluntarily exchanges dollars for goods or services, they believe they are getting more value in goods or services than they are giving up dollars. And simultaneously, every time anyone voluntarily exchanges goods or services for dollars, they believe are getting more value from the dollars than they are giving up in goods or services. That's what makes economic transactions happen: both parties believe they will be better off after the transaction.

very true, but here's the difference. and it has to do with how 'profit' is defined here. of course, both the wage worker and the capitalist are content with their transaction insofar as each believes it will bring them into a state of greater satisfaction. but it's the nature of the satisfying thing that is different; a worker cannot buy anything with the happiness he just got from accepting the job... but a capitalist can buy something with the profit he makes from selling the worker's products. the worker's profit is the satisfaction he experiences... a mental and emotional abstraction. the capitalists profit is money... a real, concrete thing.... that, incidentally, can be used to purchase more forms of satisfaction. but a worker can't use a mental and emotional abstraction to purchase anything.

Silhouette, I lean towards seeing morality as something that flows from reason, so I'm tempted to say that rational choices cannot be unethical. However, that invites a lot of post-hoc rationalizing about how anything that look immoral is really irrational on some other level.

Another way to say what may amount to the same thing is that whenever the market creates outcomes that seem immoral in a utilitarian sense, it's a market failure, almost by definition. If market transactions are voluntary, the parties are going to be made better off or unaffected -- the choice is the evidence. Third-parties can be hurt by transactions, and that is one type of market failure.

But I see the market as primarily about information: it aggregates and disseminates information about peoples wants and the ability to meet them, and that enables the production of significant value. As such, we can learn some things we might not like, for example that people don't actually value privacy, or that the market for porn is bottomless. In that sense, I take what you call the "pro-Capitalist" attitude: if our ethics are utilitarian, we're revealing our utility through the market, and we should hesitate to label the outcomes unethical in the absence of evidence that the information is being distorted. And, by the same token, we should hesitate to intentionally distort the information.

That said, we know a lot about certain market failures, certain areas where the market doesn't accurately aggregate information, e.g. because the people affected don't get a say on the price, or because the individuals who do affect price are behaving in strictly irrational ways (i.e., their preferences aren't self-consistent).

To me, the cooperative effort is structuring the market toward the end on minimizing those failures, and maximizing the information processing power of the market. I think this is not quite capitalism, though it often aligns with it. There's space for things like redistribution, which can improve information by pricing in the common good of a well structured market, and by shifting some buying power from low marginal utility spenders to high marginal utility spenders.

Serendipper wrote:UBI should be the amount of money required to at least live a meager existence or else it wouldn't fulfill its purpose of making all work voluntary.

I think making work more voluntary is good, but I don't think the minimum is survival; I would support a very low UBI. If we can afford that, and we can maintain productivity through automation, all the better, but that isn't a given. I think it should be about giving people a real dividend of the positive spillovers of a well-functioning economy, and pricing in the value of that cooperative effort.

Serendipper wrote:Only the capitalists make that argument. I don't see many socialists hollering taxation is theft lol. It's only the pirates proclaiming pirated loot is proprietary.

Well, your boy Daly was a tax protester. Socialism bleeds into anarchism at certain extremes. Given horseshoe theory, I would not be surprised to see a similar sentiment expressed by extreme socialists (though maybe you would not call them socialists).

But in any case, I don't get the impression that most capitalists make that argument. Capitalism requires a certain amount of market regulation and enforcement of contracts and private property rights, it has to accept some mechanism for funding those things.

Serendipper wrote:Yes it's unrealistic, but my point isn't to fix the system, but illustrate what's going on and how the rich are getting that way.

And my point is that the question doesn't really do that. If it's unreasonable for both the company and the employee to ask for the equivalent information, it tells us more about what's reasonable for any party to a market transaction to expect, rather than about any inequalities in bargaining power between parties.

Serendipper wrote:Management and executives are the ones overpaid to start with. They don't do anything commensurate with their pay which is a disservice to shareholders and society.

Come now, you don't care about shareholders!

But I mostly disagree. The value produced by management and executives is hard to quantify, but that cuts both ways. I would argue, and the market certainly indicates, that managers are valuable. However, it does seem likely that top executives are overpaid, ironically due in part to a discontinuity in information availability: the salaries of CEOs of publicly traded companies is public, which tends to drive up the price of CEOs! I strongly support making everyone's income public, though that would need to follow implementation of a better social safety net.

promethean75 wrote:consumers who buy things value the things they buy, and couldn't care less what 'risk' is taken by a company or what the 'driving factor' is, or who gets what 'direction' from who.

Sure, but the things they buy don't exist without someone taking the risk. If consumers want things to buy, they also want the people who take the risks to take the risks. They want someone to be the driving force on bringing a product to market, and someone to direct the whole operation to make it run. And so, because those activities result in the things that the consumers buy, the consumers do care, they just don't know that they care.

There's a bit of survivorship bias in your argument here. Lost of companies go under, because consumers don't want what they offer. But what consumers want is an unknown until they are offered things to buy and either choose to buy them or not. You can't choose to only propose true hypotheses, you can't only run experiments that will vindicate your hypotheses, and you can't only create products that are exactly what consumers want. You need the failures to have the successes, and you need people to take the risk to provide both.

promethean75 wrote:the worker's profit is the satisfaction he experiences... a mental and emotional abstraction. the capitalists profit is money... a real, concrete thing....

Ah but a wage/salary is not a 'profit', see. These are agreed upon amounts of money to be paid in exchange for a certain period of performed work or a certain unit of production. And this amount is always less than what the product is worth (what the capitalist gets for it).... so there is no profit being made here. If anything, it's negative profit. I'm in a burger king at the moment so im'a holla atcha later.

But the relevant 'product' here is the labor the worker is providing. And the wage is always greater than the value of the labor from the perspective of the worker. So the worker trades her labor for money, and the difference in value to the worker is the worker's profit. The employer trades money for labor, and the difference in value to the employer is the employer's profit. And both the employer and the worker profit because economic transactions are positive sum.

Carleas wrote:But the relevant 'product' here is the labor the worker is providing. And the wage is always greater than the value of the labor from the perspective of the worker.

The value of the labor for the laborer, in that moment, perhaps gambling.

I have crawled to the edge of the desert nearly. Yes, I take out my wallet and pay the demanded 1000 bucks for the bottle of water from the opportunist tourist I bump into just before going unconscious. Of course I make that decision and survive.

But was the value to me in that situation the value of the bottle of water?

Was the value of my labor - given I have a family, given the economic situation, given....etc. - the value it was to me given a situation - a situation perhaps encouraged by the firm I am working for - the actual value of my labor?

The laborer is often making a gamble - certianly many miners were, for example - given situations that were shaped to a much greater degree by the people offering them a certain wage for their labor.

Well, you showed up, so that means you are getting what you consider your labor is worth, plus something....

I don't think that holds.

Did it hold for sharecropper southern blacks?

The options by those in power to make a society with certain characteristics that then in turn allow for very limited choice which allows for wages at a level that is very low.

At what point between sharecropper south and now and in what industries did fairness become the rule?

Carleas wrote:Silhouette, I lean towards seeing morality as something that flows from reason, so I'm tempted to say that rational choices cannot be unethical. However, that invites a lot of post-hoc rationalizing about how anything that look immoral is really irrational on some other level.

The first sentence looks like modus ponens, but the distributivity looks like "I form", and the second sentence seems to be an admission of a propositional fallacy if you try to affirm the consequent.

That is to say, if morality is something that flows from reason, does that mean that immorality cannot also flow from reason? Further, cannot morality flow from something other than reason: say irrationality? Or do you wish to deny the antecedent as well?

This whole area of thought seems to be trespassing on the realm of the Naturalistic fallacy, or the Is-ought problem. However I am inclined to think of certain rational decisions as resulting in something that looks like morality close enough to be taken for it e.g. giving to others because you reason that it will create a better atmosphere, even beyond the direct relationship between giver and givee. Haha, I like that term, "givee": "taker" seems too tainted by its possible usage as someone who is taking advantage of another's kindness in a competetive context rather than as part of the event of giving in the cooperative sense. But I also think morality can come irrationally, and that immorality can be both rational or irrational.

Carleas wrote:Another way to say what may amount to the same thing is that whenever the market creates outcomes that seem immoral in a utilitarian sense, it's a market failure, almost by definition. If market transactions are voluntary, the parties are going to be made better off or unaffected -- the choice is the evidence. Third-parties can be hurt by transactions, and that is one type of market failure.

So if it were accepted that the market creates outcomes that seem immoral in a utilitarian sense, necessarily, then it is by definition a failure. Not a complete failure though, since not all outcomes are immoral, but when it functions as it does without equity of opportunity, that is immoral.

Carleas wrote:But I see the market as primarily about information: it aggregates and disseminates information about peoples wants and the ability to meet them, and that enables the production of significant value. As such, we can learn some things we might not like, for example that people don't actually value privacy, or that the market for porn is bottomless. In that sense, I take what you call the "pro-Capitalist" attitude: if our ethics are utilitarian, we're revealing our utility through the market, and we should hesitate to label the outcomes unethical in the absence of evidence that the information is being distorted. And, by the same token, we should hesitate to intentionally distort the information.

I agree that the nuanced information that the market provides is a huge strength. And if nothing else, its results do open up social questions that may not have otherwise been given credence, such as your examples of whether people really do value privacy and to what extent they do porn. This is most certainly progress and I would not hesitate to give the market its due for all the good that it does, but it is without ungratefulness that I still ask whether or not we can do better. Computational power, particularly enhanced by AI is an unprecedented injection that is lacking in previous experiments to do without it, and it cannot be overlooked.

However I do think we have evidence that the information that the market provides is being distorted. One way is what I'm intending my argument to convey: that voluntary transactions compromise the degree of consent between the two transacting parties - in favour of the one with more power. If we really wanted to know how much something is mutually worth, both of those transacting must have the same to lose and the same to gain prior to the transaction. As it is, we only learn what it's worth within the context of prior inequality. There's an overall correlation between the two, which is why the market is not useless and still serves a useful purpose and provides information that is not without validity.

Carleas wrote:That said, we know a lot about certain market failures, certain areas where the market doesn't accurately aggregate information, e.g. because the people affected don't get a say on the price, or because the individuals who do affect price are behaving in strictly irrational ways (i.e., their preferences aren't self-consistent).

In large part the market requires complete rationality in order to function optimally in the ethical sense, however it also permits the practice of advertising that operates almost purely to encourage irrationality. So we have at base a system that results in lack of equity of opportunity, in favour of those with more opportunity and against those with less, causing growing inequality, only enhanced by the effects of the advertising industry that it allows. Growing inequality in favour of the powerful tends towards monarchy whether or not it can finally reach it - and I wouldn't be so quick to say it can't. So not only does the market result in doing away with itself, it tends towards the centralisation of power. Is that ethical?

Carleas wrote:To me, the cooperative effort is structuring the market toward the end on minimizing those failures, and maximizing the information processing power of the market. I think this is not quite capitalism, though it often aligns with it. There's space for things like redistribution, which can improve information by pricing in the common good of a well structured market, and by shifting some buying power from low marginal utility spenders to high marginal utility spenders.

Yes, it's possible to cooperatively minimise the failures of the market alongside Capitalism - but not aligned with it: the opposite in fact. Redistribution directly counters Capitalism and we can improve information and shift buying power from low marginal utility spenders to high, but with the tide against us. Just think how many industries exist whose sole purpose is to allow Capitalism to continue, that nobody would miss if they were removed from the world excepting of their value that exists only because of Capitalism. I am talking not only about advertising, but the financial services, so much admin - all the red tape that is passed off as a result of the enemy of Capitalism, when in fact it would not be necessary if not for Capitalism in the first place. Who is a high marginal utility spender? Someone like Elon Musk (used to be?) or Bill Gates before him when he was helping create the world's most popular operating system rather than simply renting it like he does now - these are figureheads of bringing technologies that empowered humanity in a very real sense. There have been countless more with less attention afforded to them who have contributed to such successes as these - these are the people that we want to be working. Does the world really need another recruitment agency to drive it into the future, or do these people only have jobs in order to maintain the necessary foundation for voluntary trade: that everyone has a job and can thus warrant money being paid to them? These people are employed to dig holes and fill them back up compared to the real innovators of the world - get rid of them. The free market it becoming more of a crutch than a liberation.

Serendipper wrote:Only the capitalists make that argument. I don't see many socialists hollering taxation is theft lol. It's only the pirates proclaiming pirated loot is proprietary.

Well, you're boy Daly was a tax protester. Socialism bleeds into anarchism at certain extremes. Given horseshoe theory, I would not be surprised to see a similar sentiment expressed by extreme socialists (though maybe you would not call them socialists).

But in any case, I don't get the impression that most capitalists make that argument. Capitalism requires a certain amount of market regulation and enforcement of contracts and private property rights, it has to accept some mechanism for funding those things.

I don't know if most people who describe themselves as capitalists make that argument, but if the argument is made, it could only be by a capitalist lest a socialist undermine his own social aspirations.

Anarchical communism is not a teleological goal per se, but an inevitable outcome of technological progression transitioning from feudalism to capitalism to socialism and finally the government falls away like rotary phones and communism has arrived once scarcity has been eliminated. So still, no "taxation is theft" argument need be advanced by a socialist having ungoverned communism as the ultimate goal since money will have been antiquated once scarcity is gone.

Serendipper wrote:Yes it's unrealistic, but my point isn't to fix the system, but illustrate what's going on and how the rich are getting that way.

And my point is that the question doesn't really do that.

Yes it does. It illustrates how the employee did not agree to the division of the productivity, so the exchange was not voluntary, and involuntary exchanges are theft. So therefore, the taxation of that theft is simply stealing back what was stolen.

If it's unreasonable for both the company and the employee to ask for the equivalent information, it tells us more about what's reasonable for any party to a market transaction to expect, rather than about any inequalities in bargaining power between parties.

That doesn't refute anything I said. Sure, ask me how much I need to live, but it's irrelevant to the discussion about the division of the productivity. How the pie is sliced is not contingent upon how much I need to survive. How the pie is sliced is dependent upon how each party sees what is fair. Offer me a job and tell me what my service is expected to net, then we'll hash out and agree to a fair split of the profits. At that point, taxation could be considered theft since "who gets what" was agreed to and nothing was stolen.

Serendipper wrote:Management and executives are the ones overpaid to start with. They don't do anything commensurate with their pay which is a disservice to shareholders and society.

Come now, you don't care about shareholders!

I care more about shareholders than ceos.

But I mostly disagree. The value produced by management and executives is hard to quantify, but that cuts both ways. I would argue, and the market certainly indicates, that managers are valuable.

If the market really determined the value of managers, then a job would not come with a specific salary, but instead would take bids. When you want to put a roof on your house, do you announce that you will pay $10,000 for a roof and then interview for the job? No. You call a bunch of roofers and take bids. So if someone wanted to hire a manager in the spirit of the free market, then they would take bids from applicants and probably take the lowest offer. That would be a free market.

It's like my local walmart paying $250k for a store manager. I bet I could find someone to do the job, almost certainly better since he's an idiot, for half as much.

In the case of ceos, why pay some drooling moron like John Stumpf $20 million to NOT be aware his bank is ripping people off? I could find someone to be just as inept for $100k.

However, it does seem likely that top executives are overpaid, ironically due in part to a discontinuity in information availability: the salaries of CEOs of publicly traded companies is public, which tends to drive up the price of CEOs! I strongly support making everyone's income public, though that would need to follow implementation of a better social safety net.

I don't see how publicity changes anything. "Hello, I saw publicly that you're paying your ceo $20 million. Well, I can save your company $19 million right now: hire me and I'll do the job for $1 million." The reply would be, "I'm sorry sir, but we like giving shareholder money away and we're only interested in saving money if it comes at the expense of a grunt." I'll retort, "Ok fine, I'll do the job for $300 million; is that better?" They'll quip, "Well, you realize you'll be expected to do certain favors... wink wink... and your nose doesn't seem to have enough brown on it to be worth $300 million."

carleas wrote:Sure, but the things they buy don't exist without someone taking the risk. If consumers want things to buy, they also want the people who take the risks to take the risks. They want someone to be the driving force on bringing a product to market, and someone to direct the whole operation to make it run. And so, because those activities result in the things that the consumers buy, the consumers do care, they just don't know that they care.

okay sure, but this point isn't something that's gonna prove the necessity of capitalism, because those same risks would be taken in a socialist society. that's all i've been saying. all this praise for the capitalist is hollow and transparent.

carleas wrote:But the relevant 'product' here is the labor the worker is providing. And the wage is always greater than the value of the labor from the perspective of the worker. So the worker trades her labor for money, and the difference in value to the worker is the worker's profit. The employer trades money for labor, and the difference in value to the employer is the employer's profit. And both the employer and the worker profit because economic transactions are positive sum.

but the wage isn't greater than the value of the labor, because the value of the labor is equal to the price of the product/service when it is sold. that's the real, tangible value. and arguments like 'well the worker took the job because he must have valued his minimum wage' means only 'he'd rather take minimum wage than be jobless and living under a bush somewhere'.

the system forces workers into a corner, then argues that the system must be reasonable because the worker took the job... because he willingly accepted the minimum wage. but what other choice did he have? he picked the lesser of two evils, that's all.

in any case, i've never known a worker who thought 'his wage was greater than the value of his labor'. that's ridiculous. i've been a wage worker for over twenty years, and anything i've ever produced was sold for at least three times what i was paid to make it. and that's at best. i wrapped an exposed ceiling truss with poplar trim a month ago that my boss bid at $2,000. it took me all of two hours. i made $40 dollars, he made $1,960... and didn't do a damn thing but get in my way.

even deducting his overhead from that profit - cost of tools, insurance, materials, etc. - he still made a grand.

now i'm not complaining, but that's disgusting. i'm not going to call it immoral or unfair or any bullshit like that. i'm gonna simply call it ugly, and i'm gonna ask myself why workers still continue to allow this nonsense to happen.

" because the value of the labor is equal to the price of the product/service when it is sold."

But then you have to count the labour of the people that transport it, that design the logistics, that coordinate the different stages, all the way up to the businessmen that get the whole thing cracking.

I no speaka spanish, but that's right. All those things are part of the chain of production, and all those people are being paid a wage/salary that will be less than the value of the fraction of labor they provided in that chain. Now who's the guy that isn't being paid a wage? Where does he get his money if he isn't being paid? He skims the surplus value off the top, and 'skimming' is not a form of labor.

Well a lot of people get paid by commission, some truck drivers for instance. I find the name you give to the pay they get is more or less irrelevant, it is the amount the person is able to get for that labour.

You say skimming. Again, I find what you call it pretty much unimportant. The question is, why does that person get to "skim?"

Also, by what you just said before, it is not "surpluss value," as it is contemplated in the final price of the product and/or service.

Karpel Tunnel wrote:But was the value to me in that situation the value of the bottle of water?

Was the value of my labor [...] the actual value of my labor?

and also

promethean75 wrote:the value of the labor is equal to the price of the product/service when it is sold. that's the real, tangible value.

I don't see the distinction between "value to me" and "actual value" (or "real, tangible value"). In the water bottle example, it seems like maybe you're looking for an average value over time, i.e. I'm willing to pay $1000 for it after crawling out of the desert, but only $1.95 when choosing between bottled and tap.

And I think there's a couple ways to look at this. In one version, your decision to pay $1000 is strictly irrational. Say we replace the water with food, and you're on the brink of starvation from your time in the desert, and you are offered nutritious but bland gruel for $1, and equally nutritious but very flavorful steak for $1000. If you choose the steak, that's probably irrational, because if you take the gruel you will survive and you can buy a steak for $12 later. Taking the steak is irrational in the sense that it isn't consistent with all of your preferences, and you choose it because you're blinded by hunger and not thinking clearly.

On the other hand, if the steak is the only option, and you die if you don't take it, then $1000 is a steal, you'll gladly pay $1000 to avoid death, and that choice is consistent with all your preferences and not a product of hunger-blindness.

In the first case, we should say that the value of the steak isn't $1000, and in the second it is (or rather, that the steak is more valuable to you than $1000).

The fact that in different circumstances you would choose differently doesn't mean that the exchange isn't a real reflection of the actual value. "The" actual value is always just a value to a specific person in a specific situation. And all any transaction tells us is that one party values one thing more than the other, and the other party feels the other way. So, you might actually have been willing to pay $10k, or $1m for the steak, and the person selling it to you might have been willing to accept $12.

So too with an exchange for labor. The only reason the employer is willing to trade money for labor is because she values the labor more. The only reason the worker is willing to trade labor for money is because he values the money more. The actual spread between what the employer would be willing to pay and what the worker would be willing to accept is unknown. But it is known that the employer and the worker disagree about the value of the money and the labor, and that disagreement is what makes the transaction possible. If they both agreed, or if they were prohibited from accepting an exchange at anything but the maximum price the employer would be willing to pay (which is what it seems Promethean is suggesting), the transaction just wouldn't happen.

Karpel Tunnel wrote:Did it hold for sharecropper southern blacks?

Yes, given the constraints that were placed upon them. There were legal restrictions on where they could work, both on them and on employers, which suppressed demand on their labor. Cultural taboos and prejudices also restricted their options, but the legal and quasi-legal restrictions were the more pernicious (by quasi-legal, I mean enforcement of the status quo by groups like the KKK, which were not technically the law but operated with its tacit protection and blessing). Without these, the price of black labor would have been artificially low, and enterprising business owners could take advantage of the suppressed wages, which would work to counteract the prejudice and raise black wages over time (and simultaneously suppress wages of white laborers towards an equilibrium).

That appears to be what was happening, as evidenced by the introduction of minimum wage laws that were expressly advocated as a way to price out black laborers: because racism artificially reduced the value of black labor, requiring that the minimum amount that could be paid be above that value would eliminate competition. But if racism wasn't creating opportunities for non-racist employers to get comparable labor at below-market rates, such a cartel wouldn't have been appealing to the racist majority.

Silhouette wrote:This whole area of thought seems to be trespassing on the realm of the Naturalistic fallacy, or the Is-ought problem.

I'm not sure how to think of morality in the context of the market. A market economy takes values as inputs, so it seems like the concept of trying to decide our values about such a system generates the messy problems of recursion. What oughts can be offered about a system that takes oughts as inputs and generates is's as outputs? That is not entirely rhetorical, but it is not something I have an answer for.

Suffice it to say that the market is as morally pluralist as its participants, that most of the outcomes are a-moral, and that rationality for the purpose of economic analysis is scoped to preference self-consistency.

Silhouette wrote:If we really wanted to know how much something is mutually worth, both of those transacting must have the same to lose and the same to gain prior to the transaction.

While I agree with the general point that a certain amount of redistribution can improve the information the market generates, I don't think it's true that participants needs to be equals in order to generate a 'real' value. As I argue above to Karpel and Promethean, there is no such value independent of the participants, and economic exchanges require that the participants value the things exchanged differently. Decreasing inequality will decrease the spread between people, but only up to a point, so there are diminishing returns in terms of information. And redistribution is itself distorting, so significant redistribution to drastically reduce inequality will at some margin eliminate more information than it produces.

Silhouette wrote:In large part the market requires complete rationality in order to function optimally in the ethical sense, however it also permits the practice of advertising that operates almost purely to encourage irrationality.

There's a lot of wiggle room in "almost purely", but to offer a small defense of advertising as a rational and pro-social enterprise: advertising reduces search costs, which benefits consumers by making it easier to find the goods they want to buy. The internet has obviated this a bit by decreasing search costs across the board, but advertising is still a reliable signal of legitimacy, it strengthens brands, which in turn incentivize quality. Where it's intentionally deceptive, it's bad, and you're right that it can encourage irrationality even when it isn't lying. But it is not without benefit for rational consumers.

Silhouette wrote:[N]ot only does the market result in doing away with itself, it tends towards the centralisation of power.

I kind of agree with this, and in fact so do many of the most free market people I read. Libertarianism takes for granted that governments will be captured for the benefit of the rich, and proposes the solution of sharply limiting government powers, such that any action that exceeds the limit is immediately recognized as illegitimate. That prevents the rich from buying too much influence by capping the value of that influence.

The problem is that government needs to be the most powerful enterprise, it needs to be more powerful than every company it oversees, or else the rich can succeed in capturing society by capturing the largest companies. But if government is more powerful than every company, then it will always be worth capturing.

But I don't see the alternatives doing much better here. Centralizing power away from the free market just seems to expedite the process. And other solutions seem to depend on the idea that people just magically won't do that anymore. I think there is no solution, it's a balance that must continue to be fought for.

Silhouette wrote:Who is a high marginal utility spender? Someone like Elon Musk (used to be?) or Bill Gates before him when he was helping create the world's most popular operating system rather than simply renting it like he does now - these are figureheads of bringing technologies that empowered humanity in a very real sense.

This is an interesting suggestion, not at all what I had in mind but I can see the line of thinking and I think there's some merit to it. When I think of high marginal utility spenders, I'm thinking of the people struggling to make rent or feed their families. An extra dollar to those people is very, very valuable. An extra dollar to Musk or Gates seems wasted, given how many dollars they're sitting on. By moving excess dollars that lay idle with the rich (or that the rich use for another car or another vacation or another molecular gastronomy meal) to the poor who will immediately put it to use in ways that will measurably improve their lives, we can increase the effective value in the economy, and get better information about what things are worth.

But it's true that some desperately poor people will put the money into drugs or gambling, and Musk has at times leveraged himself to the hilt to create multiple enterprises that have immense social good. Still, I think that's the exception. Most successful people, even when they generally use money wisely, are also comfortable and consume wasteful luxuries. And most poor people, even when they generally make financial mistakes, will use more money in socially positive ways. On average, I would expect the marginal dollar to be more valuable in the hands of the poor than in the hands of the very rich.

Serendipper wrote:I don't know if most people who describe themselves as capitalists make that argument, but if the argument is made, it could only be by a capitalist lest a socialist undermine his own social aspirations....At that point, taxation could be considered theft since "who gets what" was agreed to and nothing was stolen.

See, this is why I think socialists are not as far from "taxation is theft" as you suggest. I would argue, and I think it's consistent with capitalism (even required by pragmatic capitalism) that even when the split of the profits between two parties is absolutely fair, there's perfect information and no asymmetry of bargaining power, taxation is still not theft, because the transaction is only possible in a world in which tax-funded institutions support market transactions.

Taxation isn't punishment, and shouldn't be thought of that way. As I pointed out to Silhouette above, we shouldn't be blaming the lucky for making rational choices in the context of their luck. It should be used to price in the cost of market-supporting institutions and to price in harmful externalities (as with carbon and sin taxes), and more generally to raise the funds necessary to fund the commons and stabilize society. That's not theft, it's the cost of doing business, and it's justified even when the business is as fair as it can be.

Serendipper wrote:It illustrates how the employee did not agree to the division of the productivity, so the exchange was not voluntary, and involuntary exchanges are theft. So therefore, the taxation of that theft is simply stealing back what was stolen.

But both sides of the exchange lack that information. The exchange is labor for money. The employee doesn't know the complete picture of how that labor will be used to generate profit for the employer, and the employer doesn't know the complete picture of that money will be used to satisfy the employee's preferences. Both parties to the transaction lack information. Moreover, they both know they lack information, and they voluntarily engage despite that lack of information. Perfect information isn't necessary for a transaction to be voluntary.

Let me propose a similar situation that may get on what we actually disagree about. Consider two firms negotiating. One firm is buying services from the other firm. The buyer will use the services to turn a profit, the seller is turning a profit on the sale. They both know this, and they're both OK with it. They don't need to open the books to each other to make that exchange fair.

To me, this exchange is comparable to the employer-employee exchange. It does not seem so for you.

Serendipper wrote:If the market really determined the value of managers, then a job would not come with a specific salary, but instead would take bids.

By this argument, the market doesn't determine the price of consumer goods, since they come with a specific price tag and 7-Eleven doesn't take bids for soda.

Serendipper wrote:I don't see how publicity changes anything. "Hello, I saw publicly that you're paying your ceo $20 million. Well, I can save your company $19 million right now: hire me and I'll do the job for $1 million." The reply would be, "I'm sorry sir, but we like giving shareholder money away and we're only interested in saving money if it comes at the expense of a grunt." I'll retort, "Ok fine, I'll do the job for $300 million; is that better?" They'll quip, "Well, you realize you'll be expected to do certain favors... wink wink... and your nose doesn't seem to have enough brown on it to be worth $300 million."

This seems to rely on the premise that CEOs don't do anything, it's not difficult, and/or the skillset is not rare, and anyone can be dropped in and do a good job. That isn't obviously the case, CEOs have a lot of power and a lot of trust, the talent pool is small and competition is fierce.

Publicity puts the employer at an informational disadvantage. If CEO salaries weren't public, hiring a new CEO at a drastic pay cut would be easier. Consider how business often (illegally) forbid employees from discussing their salary with each other. That helps keep wages down, because it lets business price discriminate in buying labor (paying worse employees less), and employees are less motivated to ask for more money because they don't know they're being hosed and no one else sees how little they make so they don't lose face. CEOs know what their peers are making, so they know what a fair package looks like, and they're motivated to bargain for more because they and everyone can see how they're valued relative to their peers.

promethean75 wrote:okay sure, but this point isn't something that's gonna prove the necessity of capitalism

I agree. But to the extent that the argument against capitalism depends on the premise that managers don't do anything, acknowledging that managers add something of value does weaken that argument and so supports capitalism.

Carleas wrote:I don't see the distinction between "value to me" and "actual value" (or "real, tangible value"). In the water bottle example, it seems like maybe you're looking for an average value over time, i.e. I'm willing to pay $1000 for it after crawling out of the desert, but only $1.95 when choosing between bottled and tap.

I'm saying that the bottle of water only has the value it was sold to me at because the person who sold it to me is a vicious person combined with the scenario.

And I think there's a couple ways to look at this. In one version, your decision to pay $1000 is strictly irrational.

No, I'm about to lose consciousness having gone without water long enough to be in danger. The only person who knows I am on this side of the sand dune is a horrible person who sees me as an opportunity to make money. He may not tell anyone I am there so I die. It is rational to buy his water, my money being valueless if I am dead.

On the other hand, if the steak is the only option, and you die if you don't take it, then $1000 is a steal, you'll gladly pay $1000 to avoid death, and that choice is consistent with all your preferences and not a product of hunger-blindness.

In the first case, we should say that the value of the steak isn't $1000, and in the second it is (or rather, that the steak is more valuable to you than $1000).

As a social mammal I find this idea that the steak has that value bizarre.

Karpel Tunnel wrote:Did it hold for sharecropper southern blacks?

Yes, given the constraints that were placed upon them. There were legal restrictions on where they could work, both on them and on employers, which suppressed demand on their labor. Cultural taboos and prejudices also restricted their options, but the legal and quasi-legal restrictions were the more pernicious (by quasi-legal, I mean enforcement of the status quo by groups like the KKK, which were not technically the law but operated with its tacit protection and blessing). Without these, the price of black labor would have been artificially low, and enterprising business owners could take advantage of the suppressed wages, which would work to counteract the prejudice and raise black wages over time (and simultaneously suppress wages of white laborers towards an equilibrium).

It seems to me the context of the discussion with Serendipper is if there is exploitation. If the people setting the market value have contributed to a value they would never have put on the product or labor themselves - if they wanted to buy the product or if they were doing the labor - they are being immoral.

I really do understnad that if money changes hands then people made a choice. It seems to me this is oddly leaving out the core of Serendipper's context which is a moral one.

But how much of this is just framing? Take the question in a more abstract form: I have an item that you want to buy, and we know that you will get >$1000 worth of value from that item. What's a fair price to ask of you for that item? Framed this way, it's much less morally repulsive, and it's very similar to Serendipper's question.

But it's the same question, we're really supposing as part of the hypothetical that the bottle of water is worth >$1000 to you. So, two people value a good differently, and we're trying to find a fair price so that the two people split the surplus. If you're really going to die, you likely value the water bottle at much greater that $1000.

This reframing is not dishonest, it's only a difference of emphasis. I agree that intuitive morality says we should just give the dying person water, but we might reframe intuitive morality as naive morality.

For example, take price gauging in the run-up to a hurricanes. People have strong intuitions against it, but price gauging in those situations serves a very important function that has positive social spill over. First, it maximizes the supply that will be available in the affected area, by compensating people for the risk and expense of making more supply available. Second, it limits hoarding: without price gauging, cases of water sell out in a few hours, but if they have to pay a price that accurately reflects the value they expect from the water, they will be more careful to buy only what they need and leave more for other people to buy. Price gauging looks opportunistic, but letting prices track value aggregates information and allocates scarce resources efficiently. That's what the market's for.

That's a bit different from a one-off, dying in the desert situation, but it does demonstrate that economic exchanges that are intuitively icky can be socially beneficial. Sometimes our gut reaction is wrong.

For example, take price gauging in the run-up to a hurricanes. People have strong intuitions against it, but price gauging in those situations serves a very important function that has positive social spill over. First, it maximizes the supply that will be available in the affected area, by compensating people for the risk and expense of making more supply available. Second, it limits hoarding: without price gauging, cases of water sell out in a few hours, but if they have to pay a price that accurately reflects the value they expect from the water, they will be more careful to buy only what they need and leave more for other people to buy. Price gauging looks opportunistic, but letting prices track value aggregates information and allocates scarce resources efficiently. That's what the market's for.

What about the people who can't afford to buy the water at inflated prices?

They die. Their families die.

They depend on the kindness of the "naive".

Why are there slums in the richest country in the world? Important functions being served. Positive social spill over. Efficiency.

pedrosophocles wrote:The question is, why does that person get to "skim?"

because it is allowed by law. the dual history of the gradual development of the politics and economics of western civilization involves a hidden pretense that's really quite brilliant. the idea that 'government' and the 'state' fundamentally restricts the freedom of people was a philosophical rumor set in motion by the bourgeois. it's purpose was to persuade the working classes to be suspicious of the 'state'... which would result in preventing the state from interfering with the acquisition of property and wealth through exploitation. the biggest enemy of the capitalist is not the 'worker', but the organized mass of workers - the 'state' - which would have the power to radically change and reform property laws. so basically, it's not that the 'state' is some evil, authoritarian entity that wants to restrict the rights and freedoms of the people. it's that only the state would have the power to control the laws that allow the capitalists their privilege to 'skim'.

carleas wrote:I don't see the distinction between "value to me" and "actual value"

i wasn't disputing that, and we haven't been on the same page for a week. this is why i don't do debates anymore. this discussion has been slowly twisting and turning... so much now that the original argument has been lost. i'm saying:

a) the capitalist does not add anything to the chain of production that wouldn't be there if he did not exist.b) the capitalist's 'opinion' that what he does is valuable because he decides it is valuable, is irrelevant. c) the worker's value is equal to the value of what he produces. the value of what he produces is determined by the market. the wage that the worker gets in exchange for his labor is always less than the value of what he produces. the difference is the surplus value the capitalist gains through becoming an unnecessary and extraneous intermediary between the producer and the consumer. d) ergonomically, functionally, the capitalist is quite literally analogous to a parasite.

but before you reply, i surrender. i can't muster enough interest in this discussion anymore to put the necessary effort into it. that, and i've been busy.

no, he slipped in there... what was already up and running. human beings have been organized producers since they developed opposable thumbs and dropped down from the trees. we've been designing and using technologies for eons, long before the 'capitalist' was even conceived of by some ruling class philosopher yesman. the only thing the capitalist ever 'got going' was wage labor when he evolved from the merchant into the employer and began paying workers to make things. then, as he accumulates wealth, he buys further means of production (factories, tools, etc.), he appropriates what was already in existence and made by workers. he doesn't start any chain of production. he slips into the mix after it's already going.

phyllo wrote:What about the people who can't afford to buy the water at inflated prices?

The same thing that happens to everyone who arrives at the store after the shelves are bare. The difference is that prices that track supply and demand minimize the number of people who don't get water.

I agree that there is something unseemly in deciding who lives and who dies based on wealth. But I don't think it's better that more people die so long as the decision is made based on how early they got to the store instead of on wealth (especially because I expect 'how early they get to the store' to correlate with wealth anyway).

Promethean, thank you, I understand if you're busy or over this conversation, please feel free to ignore what follows; I won't take your silence as disrespect or as a concession on any open points. But my replies are as much for me as they are for you, so I will think through your parting thoughts below. I've appreciated our discussion.

promethean75 wrote:a) the capitalist does not add anything to the chain of production that wouldn't be there if he did not exist.

I thought you had conceded this point here. In short, my contention is that the capitalist contributes risk-taking, initiating action, and organizing the enterprise.

Also, Pedro made a good point in response to this claim that I missed:

Pedro I Rengel wrote:Also, by what you just said before, it is not "surpluss value," as it is contemplated in the final price of the product and/or service.

The point Pedro makes, as I understand it, is that the cost of the final good includes whatever amount the capitalist takes for herself. If that's the case, and if the capitalist adds nothing of value, then a competing good could be produced for less by paying the capitalist less, with the market price settling around the equilibrium of paying the capitalist zero or near-zero. The fact that this doesn't happen seems like strong prima facie evidence that the capitalist does indeed add value.

promethean75 wrote:c) the worker's value is equal to the value of what he produces. the value of what he produces is determined by the market. the wage that the worker gets in exchange for his labor is always less than the value of what he produces. the difference is the surplus value the capitalist gains through becoming an unnecessary and extraneous intermediary between the producer and the consumer.

This is the crux of the disagreement, but I think we can connect our positions. Take a laborer who makes widgets, which sell for $100 each. Each widget is made by assembling several components using some power tools.

Separate from (a) and separate from the value-to-who arguments I've been making, let's see if we can specify the price of 'what [the worker] produces' Call it P(w). It can't be equal to the price of the widget, because the widget is composed of raw materials that cost money. We'd also need to subtract the pro-rata price of the tools and their maintenance, and the power to run them. So, \( P(w) \leq $100 - (materials) - (overhead) \)

I would also subtract the price of coordination (i.e. ordering the materials, paying the electric bill). And I would add in the cost of fronting the money for the raw materials. I think both of these fall under your objection in (a), and I would respond that these are valuable.

So, I contend that \( P(w) \leq $100 - (materials) - (overhead) - (coordination) - (risk) \)and I think you contend that some of those values are just $0.

If that's right, then we only disagree on 1) whether there are zeros in the equation, and 2) whether the employer has an obligation to pay the maximum amount that it would be willing to spend to obtain the inputs into the widgets (including P(w)). I think the answer to both is no.